The Indian stock market is set to resume trading on Nov 11, Wednesday after a holiday, with analysts favouring a 'buy-on-dips strategy' as the recent rally continues to support the bullish sentiment.
On Nov 9, Nifty had ended in the green in the previous session on Nov. 9, rising 0.23%, with SBI and Trent leading the gains, advancing 2.5% and 2%, respectively. The Sensex also closed 0.31%, or 107 points, higher at 81,106.65. The Nifty Midcap 150 had advanced 0.3%, marking its second consecutive session of gains, while the Nifty Smallcap 250 ended 0.1% lower. IREDA and GSK Pharma were among the top index gainers, rising over 7% each, while RR Kabel and TD Power Systems led the losses.
This follows a sharp rally in the Indian stock market last week, with the benchmark Nifty surging 8.6%, improving investor sentiment.
"A rare convergence of positive news for India - FIIs turning aggressive buyers, fair valuations, winding down of AI trade, dip in crude price, decline in US bond yields and steadily improving corporate earnings as reflected in Q2 numbers - triggered the rally," said Dr V K Vijayakumar, chief investment strategist at Geojit Investments.
Vijayakumar added that the Democrats' victory in the US elections provided the trigger for the rally by raising concerns over a potential deceleration in AI spending and a sharp correction in AI stocks.
Against this backdrop, Vatsal Bhuva, the technical analyst at LKP Securities, believes the Nifty's bullish momentum remains intact despite consolidation over the last two sessions.
"After a strong rally, Nifty has been consolidating over the last two sessions; however, continued buying interest indicates underlying bullish sentiment. Hence, a buy-on-dips strategy remains advisable for index traders," Bhuva said.
He identified 24,750-24,800 as the crucial support zone and suggested traders holding positions from lower levels trail their stop-loss to 24,800. A sustained move higher could take the index towards its immediate resistance at 25,200.
While the index is slightly overbought, Bhuva said there are no significant signs of weakness at present.
Bank Nifty Outlook
The Bank Nifty continues to show strength following a decisive breakout above its previous swing high, indicating sustained buying momentum.
"Bank Nifty continues its upward rally following a decisive breakout above its previous swing high, indicating sustained buying momentum," Bhuva said.
Although the RSI has entered the overbought zone, raising the possibility of a near-term pullback, the analyst sees no significant signs of weakness in the index.
Bhuva identified 59,000-58,800 as the crucial support zone, with 60,000 as the immediate resistance. He advised traders to hold existing long positions with a trailing stop-loss at 59,000.
He added that a sustained upward move could take the Bank Nifty towards 61,000-61,500 in the short term.
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